Ready Capital Faces Legal Action After 27% Stock Decline

2025-04-28 companies

New York, Sunday, 27 April 2025.
Ready Capital Corporation faces a lawsuit due to significant stock decline allegedly tied to financial misrepresentations. Investors may join legal proceedings led by BFA Law before May 5, 2025.

Background on Ready Capital’s Financial Turmoil

Ready Capital Corporation (NYSE: RC), a real estate finance company headquartered in New York, is embroiled in a lawsuit following a nearly 27% decline in its stock price. The legal action, initiated by Bleichmar Fonti & Auld LLP, highlights alleged securities fraud due to misrepresentations about the impact of non-performing loans in Ready Capital’s commercial real estate portfolio. The class-action lawsuit, Goebel v. Ready Capital Corporation, was filed in the U.S. District Court for the Southern District of New York and involves investors who purchased the company’s stock during the defined class period from November 7, 2024, to March 2, 2025 [1][2][3].

Allegations and Financial Implications

The core of the allegations against Ready Capital revolves around purportedly false financial statements and an understated reserve amount for non-performing loans, leading to misleading reports on its financial health. On March 3, 2025, the company disclosed a $382 million charge, including $284 million for credit loss and valuation allowances, which precipitated the sharp drop in stock value from $6.93 on February 28, 2025, to $5.07 on March 3, 2025 [2][4][5]. This significant financial adjustment was a critical factor in the drastic stock price reduction, raising concerns among shareholders about the transparency and accuracy of the company’s financial communications.

Legal Proceedings and Investor Actions

Investors who believe they have been adversely affected by these alleged misrepresentations have until May 5, 2025, to apply for lead plaintiff status in the lawsuit. The findings of insufficient risk mitigation and the underestimation of non-performing loan collections have formed the basis of the legal charges. Representation by law firms, such as Bleichmar Fonti & Auld LLP and Hagens Berman, is offered on a contingency fee basis, ensuring no upfront costs to the shareholders. Investors are encouraged to submit their information promptly through dedicated legal websites [1][2][6].

Investor Considerations and Broader Market Impact

This lawsuit against Ready Capital underscores the broader financial risks and market volatility experienced in the commercial real estate sector, particularly as interest rates and economic uncertainties affect market dynamics. With the May 5 deadline approaching, investors must consider the potential influence of this legal battle on their portfolios and explore all available legal avenues to recover incurred losses. This case not only highlights the inherent risks associated with investments in financial entities with substantial CRE portfolios but also the necessity for thorough due diligence by both investors and rating agencies alike [3][5][7].

Sources

stock drop fraud lawsuit